Nathaniel Chastain, a former product manager at OpenSea has been charged with insider trading relating to digital collectibles bought and sold on the NFT marketplace in September 2021.
Nathaniel Chastain, 31, was charged with insider trading by US prosecutors in Manhattan on Wednesday. Chastain worked as a product manager for OpenSea, the world’s largest nonfungible token (NFT) exchange.
This will be the first time a case involving digital assets and traditional criminal investigations has been brought together. Prosecutors believe Chastain purchased 45 NFTs on OpenSea using anonymous hot wallets and anonymous accounts, then sold them for a profit.
He allegedly purchased them just before they were listed on the OpenSea marketplace webpage and promptly sold them for a profit.
He would have had the power to determine which NFTs were showcased as the product manager, providing him direct access to the insider information he had developed.
The NFT named “Spectrum of a Ramenfication Theory” on Sept. 14, 2021, was included in the claim of 11 distinct trades and would have been sold the next morning for nearly four times the buying price.
U.S. Attorney Damian Williams spoke on his office’s commitment to investigating all forms of insider trading. Money laundering and wire fraud were both accused against Chastain. Both counts carry a potential punishment of 20 years in jail.
OpenSea claimed to have known about Chastain’s activities before, launched an investigation, and asked him to leave when it became evident that he had broken company rules. Chastain willingly left the project soon after and began work on his own project, Oval.
Similar charges of insider trading were recently addressed by Coinbase CEO Brian Armstrong. It’s possible that the people involved were either Coinbase employees or were related to the company.
Although Armstrong did not confirm any disciplinary actions or criminal charges against his workers, he did state that Coinbase was aiming to alter its listing process in the near future to avoid the situation.